CIGFARO Public Sector Finance GRAP Seminar Update on ASB Activities

1. CIGFARO PUBLIC SECTOR FINANCE GRAP SEMINARUPDATE ON ASB ACTIVITIES 2 July 2018

2. Disclaimer The views and opinions expressed in this presentation are those of the individual. Official positions of the ASB on accounting matters are determined only after extensive due process and deliberation.

3. Content • Changes to GRAP Reporting Framework 2017/2018 to 2019/2020 • Changes to Frequently Asked Questions (FAQs) • Overview of current projects • Current Exposure Drafts available for comment

4. 1. Changes to GRAP Reporting Framework2017/2018 to 2019/2020

5. Changes to GRAP Reporting Framework 2017/2018 No changes from 2016/2017 to 2017/2018 GRAP Reporting Framework

6. Changes to GRAP Reporting Framework 2018/2019 Two pronouncements effective 1 April 2018: • Improvements to the Standards of GRAP • Amendments GRAP 21 & GRAP 26 Impairment of Assets

9. Newly effective Standards of GRAP

10. Changes to GRAP Reporting Framework 2019/2020 Three pronouncements effective 1 April 2019: • IGRAP 18 Recognition and Derecognition of Land • IGRAP 19 Liabilities to Pay Levies • Guideline on Accounting for Arrangements Undertaken in terms of the National Housing Programme

14. 2. Changes toFrequently Asked Questions (FAQs)

15. Changes to Frequently Asked Questions • Updated FAQ document by: • Adding new FAQs • Amending existing FAQs • Other minor amendments • Latest issued June 2018 • Available on ASB website

16. New FAQs FAQ 2.7 Use of valuer to determine FV • Standards allow use a valuer / another expert, including employee, if: • valuer is member of a valuation profession & holds recognised & relevant qualification; or • other expert has requisite competence to undertake appraisal i.a.w. requirements of Standards

17. New FAQs (cont.) FAQ 3.5 Cash & Cash equivalents • Consider (a) definition & (b) purpose for holding • Disclose policy to classify cash & cash equivalents

18. New FAQs (cont.) FAQ 6.4 Interaction of GRAP 32, 8 & 109

19. New FAQs (cont.) FAQ 6.6 Renegotiated payment arrangements • New FL / amendment of original? • Substantially different terms: extinguish original & recognise new • How measure new FL initially? • @ FV (normally transaction price) • Not transaction price: estimate with valuation technique • Consider if concessionary loan

20. New FAQs (cont.) FAQ 7.3 Classifying asset not heritage • Based on intended use; apply principles in Standards • Asset decision tree

21. New FAQs (cont.) FAQ 7.4 Classifying research specimens • Heritage asset definition • Before research, cannot conclude that • has cultural, environmental, historical, natural, scientific, technological or artistic significance; & • to be held indefinitely for benefit of present & future generations

22. Amend existing FAQs FAQ 3.4 analysing expenses by nature / function • Explains what nature and function mean • Examples added illustrating inappropriate presentation: • Repairs & maintenance, grant expenses, contracted services, project expenses

23. Amend existing FAQs (cont.) FAQ 4.3 Services received in-kind • Align to GRAP 23 & clarify: • Recognise when: • significant to operations / service delivery objectives; • probable that FEB / SP will flow to entity; and • fair value of assets can be measured reliably • Disclose for recognised and unrecognised: • nature & type of major classes of goods/ services received in-kind

24. Amend existing FAQs (cont.) FAQ 6.1 Free basic services • Clarify expenses relating to free basic services not reclassified from nature to another line item such as “free basic services”

25. Amend existing FAQs (cont.) FAQ 7.1 & 7.2 Classify asset as heritage • Move from FAQ 2.9 7.1 7.2

26. Amend existing FAQs (cont.) FAQ 7.5 Classify living resource as heritage • Move from FAQ 2.6 • Heritage asset definition • Held indefinitely for benefit of present & future generations NOT demonstrated in living animals & plants • have distinct lifecycles; cannot be held indefinitely

27. Amend existing FAQs (cont.) FAQ 7.6 Classifying statues, sculptures, monuments, similar structures & replicas as heritage assets • Move from FAQ 2.5 • Person / event commemorated, or object duplicated, may have significance • Assess if statue, sculpture, monument, similar structure / replica also has

28. Other minor amendments • Updated section 1 Reporting Framework and Related Issues for: • Update for 2017/18 GRAP Reporting Framework • Clarify FAQ 1.3 status of Standards not in reporting framework & reflect approval by Minister of Finance • Delete FAQ 1.7; relevant info included in FAQ 1.3 • Add disclosure requirements to (now) FAQ 1.7 • Footnote ref to new Conceptual Framework • Move FAQ 7.1 to section 6 as FAQ 6.5; rename section 7 to Heritage Assets

29. 3. Overview of other current projects

30. Overview of current projects • Revision of GRAP 104 on Financial Instruments • Interpretation on Adjustments to Revenue • Amendments to IGRAP 1 • Guideline on Accounting for Landfill Sites • Guideline on The Application of Materiality in the Preparation of Financial Statements

31. 1. Revision of GRAP 104 • Revision of GRAP 104 to align with: • IFRS 9, and IAS 32, IFRS 7 • Aligned where appropriate for local circumstances • Proposed Exposure Draft to be issued for comment

32. High level changes

33. High level changes (cont.)

34. 2. Interpretation on Adjustments to revenue • Relates to revenue levied i.t.o. legislation • Provides guidance on when adjustments: • corrections of errors • Did not follow legislated process, tariff, basis, etc. incorrectly applied • changes in estimates • New information available, changes in circumstances • Proposed IGRAP for comment

35. 3. Guideline on Accounting for landfill sites • Objective: provide guidance to address inconsistent accounting practices • Scope: General & hazardous waste • Accounting for: • Land in a landfill • Landfill site asset • Rehabilitation provision • Format guideline; Board’s due process • ED 166

36. 4. Guideline on Materiality • Guideline on The Application of Materiality in the Preparation of Financial Statements • Currently under development  July 2018 for comment • How to apply materiality in preparing financial statements, including case studies

37. 4. Current Exposure Drafts

38. Current Exposure Drafts

39. Current Exposure Drafts (cont.)

40. Current Exposure Drafts (cont.)

41. Stakeholder outreach and communication

42. Outreach activities • Continuous promotion of GRAP by improving outreach to stakeholders (workshops, meetings, seminars, SAICA webinars) • Stakeholders should liaise with ASB when requiring any engagements • Newsletters & Meeting Highlights • Social media • Handbook (order form available on website or on request)

43. Translation • Standards translated into isiZulu, Sesotho and Afrikaans • The official version is the English language version • Available on website

44. Website • Overview of changes made to Standards with effect from 1 April 2016 • Three set of Standards: • Those entities with a December year-end • The Standards applicable for the current year • The Standards applicable for the next financial year • Please register on website if you want to be advised of changes: http://www.asb.co.za/GRAP/Subscribe-to-email-alerts

45. Submitting comments Visit our website for more information on these Exposure Drafts www.asb.co.za Submit your comments to info@asb.co.za

46. THANK YOU

47. Contact details Tel: (011) 697-0660 Fax: (011) 697-0666 Email: info@asb.co.za Website: www.asb.co.za